India says China’s involvement in Colombo’s East Container terminal only for EPC contract

P Manoj Mumbai | Updated on November 25, 2021

Only SLPA can operate ECT, per the deal signed with Adani Group for the West Container Terminal

A decision by the Sri Lankan cabinet on November 23 to award a deal to a consortium involving a State-owned Chinese company for the second phase of the East Container Terminal (ECT) at Colombo port is only an engineering, procurement and construction (EPC) contract and not for operating the terminal that was earlier planned to be run jointly by India and Japan.

After scrapping the tripartite memorandum of cooperation signed with India and Japan on the ECT, the island nation awarded the West Container Terminal (WCT) project to a consortium led by Adani Ports and Special Economic Zone Ltd (APSEZ).

The Build, Operate and Transfer (BOT) agreement was signed for the WCT on September 30.

China’s presence?

The award of the EPC deal for the second phase of ECT to a consortium involving China Harbour Engineering Company (CHEC), a unit of China’s State-owned China Communications Construction Company, has raised concerns that China was strengthening its presence in Colombo Port, a strategic container transhipment hub in the region.

However, Indian government officials briefed on the development, said that such concerns were “unfounded”.

“The deal awarded to the China Harbour Engineering consortium is only for the EPC contract. Nobody can operate the ECT except the state-owned Sri Lanka Ports Authority (SLPA). This condition is written into the 35-year BOT agreement signed between APSEZ, John Keells Holdings Plc and SLPA,” said a government official briefed on the agreement.

Also read: Adani’s Colombo port work set to start

China’s State-run China Merchants Port Holdings Company Ltd holds an 85 per cent stake in the 3 million TEUs-capacity Colombo International Container Terminals Ltd (CICT), a joint venture terminal it runs with Sri Lanka Ports Authority (SLPA).

Besides, China Merchants Port Holdings Company holds majority stake in the southern Hambantota Port.

China Harbour Engineering is involved in strategic infrastructure projects, including the $1-billion Colombo Port City Project coming up near Galle and a four-lane elevated highway connecting Colombo’s suburbs.

Published on November 25, 2021

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